You've answered all those questions and your business is about to begin. But, before a plan can be put into effect, you must have a plan. When the concept of business planning is considered, we have found that no task seems to cause more consternation than that of preparing a business plan. In fact, most new business owners will forge ahead being sure that a good idea, enthusiasm, and the desire to achieve their goals will be enough to ensure business success. Unfortunately, there is a major flaw in this type of thinking.

      Most business owners are not proficient in all phases of their particular industries and, therefore, are not able to make the very best decisions and see what changes will have to be implemented in the future. Business planning is the most effective way to overcome this deficiency and enable you to organize the making of business decisions into a logical process.

Why write a Business Plan?

      There are two main purposes for writing a business plan. What are they and why are they important enough for you to decide to write one?

  1. To serve as a guide during the lifetime of your business. This is the most important reason for writing a business plan. Writing a business plan will force you to consider everything that will come into play to make a success out of your business. It will also provide you with a means to periodically analyze what is happening in your business and give you a solid basis on which to make decisions and implement changes. In short, it is the blueprint of your business and will serve to keep you on the right track. If you will spend the time to plan ahead, many pitfalls will be avoided and needless frustrations will be eliminated.

  2. To fulfill the requirement for securing lenders and investors. If you are planning to seek a loan or venture capital, you will be required to submit solid documentation in the form of a business plan.

      Your business plan will provide potential lenders and investors with detailed information on all aspects of the company's past and current operations and future projections. It will detail how the desired investment or loan will further the company's goals. Every lender and investor wants to know how the loan will improve the worth of your company. Your business plan will detail how the money will be used and how it will enhance the company's profitability.

Format of a Winning Business Plan.

      Don't be fooled. Writing a business plan requires many days and possibly months depending on the complexity of your business. But, you can write it yourself, and in doing so, you will know your business better by the time you finish. There is a lot of research to be done. Even if you hire a professional planner, you will be required to supply the information and statistics that will go into your business plan. This phase will amount to about 80% of the job – the other 20% is a matter of knowing how to put the information together into a readable plan.

      Much of the confusion seems to stem from the fact that most business owners do not know what elements to include or how to organize their information into a logical sequence. In order to work, a business plan must not only have all of the necessary parts, but be put together in a functional pattern. When you write your business plan you will want to cover specific subjects in a particular order. You will also need to maintain continuity between all sections of the plan. Whatever you document in the text sections must be reflected in the financial documents.

      Be sure to include the following components—